Clear, Positive Direction for Abenomics: Matsui

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Jan. 13 (Bloomberg) -- Kathy Matsui, chief equity strategist at Goldman Sachs Japan, discusses the impact of Abenomics on the Japanese economy on Bloomberg Television’s “On The Move.”

Now, you say steady progress, reform is on the way.

You are fairly upbeat.

We think that the arrows of reform and growth have been launched.

Prime minister abe and his regime.

We have only seen one year of this administration, what they can deliver.

There is more on the agenda that needs to be executed.

We think the direction is very positive and very clear.

Not every area of the reform agenda will be accomplished and implemented in a timely fashion as the markets would like to see, but we think a direction is very clear.

Do you think that we, in the west, expect so much from this third arrow that there is a reasonableness in terms of what can be delivered?

Inflation is 50% of the way there.

When the you see it adding up to two percent?

Given the distortion that will be coming in and next few months from april 1, we will see cpi hit close to 3% in this current year.

Excluding the impact, it will take another year plus before we hit the core inflation level of 2%, the boj's target.

Former to that scenario will be whether japanese wages grow or not.

Will they?

A lot of investors were very skeptical about the prospect that wages would ever row up after they have been declining for seven straight years.

If you think about the big picture, corporate japan is sitting on tons of cash, about $750 billion worth of cash.

At the same time, they are earning 60% more profits than one year ago.

So they can afford these wages.

Lex i think it is a sheer lack of confidence that the future might be brighter than today or yesterday that is holding them back.

We think that attitude will start to change.

You have got a great -- i love this.

This is not 1997. you say it is a very different scenario.


In three respects.

In 1997, the rest of asia was discouraging a gut wrenching currency crisis.

We do not have that right now.

We could have taper.

We think that will be very gradual.

Second, we do not have a financial system meltdown domestically.

Third and most importantly, we do not have deflation.

This mentality shift of japanese people thinking, if i wait, it will get cheaper.

To if i way, it might get more expensive.

That is driving the change in consumer sentiment.

We think that will be manageable given that we expect wages will grow and the mentality of consumers will shift towards tomorrow will be a brighter day.

Into equity strategy.

You say you will deliver better returns than the u.s. and europe.

What is achievable in japan going into 2015? you think about who has been the main driver of this rally in japan today.

It has been mainly the foreign investor community.

The foreign investors have about $470 billion worth of japan.

That is less than what they bought during entire rally between 2001-2006. none of my domestic investors have participated in this rally at all.

We expect retail investors -- japan will launch version of buttocks.

-- of products.

We will possibly get the world's largest pension scheme.

$1.2 trillion in assets.

Domestic equities could be shifting as well.

Have a great day at that

This text has been automatically generated. It may not be 100% accurate.


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